Monday, February 23, 2009

It's official - economy has bottomed out

For those who have their money and/or retirement in a mutual fund, more than likely you’ve lost half your money in the past year-and-a-half (even more when you figure inflation). Don’t take my word for it, check this Feb. 23, 2009 story:

By TIM PARADIS, AP Business Writer

“The Dow Jones industrial average tumbled 251 points to its lowest close since Oct. 28, 1997


“According to preliminary calculations, the Dow dropped 250.89, or 3.41 percent, to 7,114.78. It last closed this low on Oct. 28, 1997 when it finished at 6,971.32. The Dow hasn't traded below the 7,000 mark since October 1997.”


Admittedly, I have several mutual funds because you don’t put all your eggs in one basket. My mid-cap is doing well. If you need to know what a “mid-cap” is, call a broker and remember they’re called “broker” for a reason. Ask them where they invest their money – surprise, they don’t or it’s in tobacco and liquids – in other words wine and cigarettes. If you’re a “broker” right now, you need those. Or you could spend a couple hours a week educating yourself.


I wish I could say I’m all wise and created all this information myself. Go back to the previous paragraph. If you want to keep your money, you educate yourself.


Wish I was as wise as chartingstocks.net. The first day of 2007, it had a blog “The Coming Stock Market Crash of 2007.” Pretty accurate prophecy of what has been going on the past two years.


Oct. 9, 2007 baby-boomers and fools leaped for joy. Dow went over 14,000. In 1984, I remember watching it with the son of the owner of Crow Publishing. We were betting on 2,000, which it hit in 1985. Wonder if it will hit that level again this year? The good thing if it does, homes averaged $75,000 that year and interest rates were at 15 percent. If you purchased one of those $225,000 or higher average priced homes, not so good for you.


Now for today’s lesson: Where the economy is going.


You find wisdom everywhere if you look for it. This past weekend I was freaking out because gold is near or over $1,000. I remember when owning gold became legal and it was like $250 an ounce. To have gold at $1,000 was surely the death knoll for the U.S. dollar, I thought. Until I spoke to a customer service rep at Godaddy.com.


This wise expert, probably making $13 per hour compared to those million-dollars a year stock brokers you consult, wisely said, “What about the other precious metals?” Wise, wise, wise!


Looking at silver, it is down about a third of where it was a year ago, but double what it was five years ago – a good indicator that I will explain in a moment.


A look at platinum reveals it is down 250 percent from a year ago, at about the same price it was five years ago. Another good indicator.


Then you look at gold. It is higher than it was when gas was nearly $5 a gallon (which I predicted in a summer, 2007 story in the Arizona Republic). Looking at the five year history for gold bullion, you see it is up 250%.


These precious metals tell a story. Silver and platinum are indicators that the depression has bottomed out and now would be an EXCELLENT time to do your homework and find some worthy investments – I recommend real estate.


The rise in gold tells me something else. The fool investors who drove up home and stock market prices to a level beyond their value have been listening to those “buy gold” pitches on the radio.


The economy isn’t about to fall – only for those fools who rush from one trend invesmentt to another, purchase SUVs and Krispy Kreme donuts and think In-n-Out burgers are any different than McDonald’s or Burger King . These fools are driving up gold prices and will get burned like they did in both the stock market and buying those rental homes to flip. Good luck on that. It doesn’t work. It's okay, though. The taxpayer will be there again to pay for these investors' stupidity.


Do your homework and invest wisely. Listen to those lowly customer service peons you want to ignore. They’re probably smarter than you. I KNOW they’re smarter than me.

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